Arcadia Petroleum Ltd and Others v Peter Miles Bosworth and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Males |
| Judgment Date | 15 December 2015 |
| Neutral Citation | [2015] EWHC 3700 (Comm) |
| Docket Number | Case No: 2015 Folio 156 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 15 December 2015 |
[2015] EWHC 3700 (Comm)
Mr Justice Males
Case No: 2015 Folio 156
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Fionn Pilbrow and Mr Edward Harrison (instructed by Freshfields) for the Claimants
Mr Richard Eschwege (instructed by Quinn Emmanuel) for the First and Second Defendants
Hearing dates: 15 th December 2015
Approved Judgment
This is an application by the claimants for permission to take steps abroad in Switzerland and Lebanon to recognise and enforce an order, the inter partes confirmation of a worldwide freezing order, made by Mr Justice Flaux on 1 July 2015. It has been referred to in the hearing as "the Flaux Order" and I shall use the same term.
The claimants are four companies, three of them with the name Arcadia in their title, all companies within the Arcadia Group of companies, and the fourth, Farahead Holdings Limited, is their parent company. They seek permission to enforce the Flaux Order abroad against the first, second and seventh defendants. The first defendant, Mr Peter Bosworth, is the former chief executive officer of the Arcadia Group. The second defendant, Mr Colin Hurley, is the former chief financial officer. Both of these defendants are domiciled in Switzerland. The seventh defendant, Arcadia Petroleum SAL Offshore, is a Lebanese company which has been referred to as Arcadia Lebanon. There are a number of other individual and corporate defendants, but I need not identify them for the purpose of this judgment.
The claimants allege that they have been the victims of a substantial fraud, of which they say the first and second defendants were the principal architects, in which the Arcadia Group's former management and others siphoned off sums from the group for their own benefit and to the detriment of the Arcadia Group companies. They allege that the fraud arose from the group's oil trading in West Africa and that it involved the insertion of corporate entities, one of which was Arcadia Lebanon the seventh defendant, into the transaction chains between West African oil sellers and Arcadia Group entities, or between Arcadia Group entities and the ultimate purchasers of the oil. It is the claimants' case that the activities in question were kept secret from them, in particular from the fourth claimant, Farahead, and were conducted without their knowledge and authorisation. The damages claimed are very substantial, some US$335 million.
The first and second defendants deny those allegations. They are currently challenging the jurisdiction of the English court over all claims against them, and for that reason have yet to file a defence, but what they say is that the claimants, and in particular representatives of Farahead, knew and authorised at all material times the Arcadia Group's West African oil trading activities. They say that oil trading in West Africa is fraught with reputational and regulatory risks, largely, as I understand it, because of the actual or perceived risks of corruption endemic in some countries in that part of the world, and that the Arcadia Group knew of and consented to the insertion of what are referred to as "sleeve" entities into the trading transactions in order to distance and protect itself from those risks. It is not entirely clear to me how the insertion of a company with the name Arcadia Petroleum SAL and run by the group's CEO and CFO would protect the group from reputational risks or distance the group from the transactions in question, but that is a matter which need not be pursued further on this application.
That in brief, and no doubt omitting many of the nuances of the case, is what the main issues are likely to be about.
On 12 February 2015, at a without notice hearing, the claimants obtained an order from Mr Justice Teare against each of the defendants, which included a worldwide freezing injunction with associated asset disclosure provisions, a proprietary injunction with provisions requiring the provision of information and disclosure in support, and a document preservation order. On 1 July 2015 the matter came before Mr Justice Flaux inter partes and the Flaux Order was made with the consent of all the represented defendants, including the first and second defendants.
Both the original without notice order and the Flaux Order contained an undertaking on the part of the claimants in standard form, not without the permission of the court to seek to enforce the order in any country outside England and Wales, or to seek an order of a similar nature, including orders conferring a charge or other security against the respondent or the respondent's assets.
There was, however, in the original without notice order made by Mr Justice Teare permission given to the claimants to take steps in Spain to obtain a prohibition on sale at the Ibiza Land Registry against an identified property, which I understand is the property of the first or second defendant, and also to apply in Florida for an order for the preservation of documents. I am told that although permission was given to apply in Spain for that prohibition on sale, in fact no such application was made because the costs of doing so, and in particular the liability for stamp duty, made such an application not worthwhile.
The orders, both at the without notice stage and in the Flaux Order, contain provisions relating to the defendants' living expenses and legal costs, contemplating potential expenditure of very large sums by way of legal costs, which no doubt reflects the scale and complexity of this litigation.
I should note that the defendants attach significance to the fact that the claimants' evidence in support of their initial application to Mr Justice Teare identified three kinds of transaction, known as Variations 1, 2 and 3, although in fact, as I understand it, the losses alleged arose in each case, or at least in the greater number of cases, from transactions in the form of Variation 2. Variation 3, which I need not describe, was said by the claimants to be a particularly striking instance of fraud, but it appears that reliance on that example has now been abandoned. Although the defendants attach some significance to the claimants' abandonment of reliance on Variation 3, and this may or may not prove to be significant as the case develops, in my view it is of little if any relevance to the present application.
Having obtained the Flaux Order inter partes, the claimant now seeks permission to enforce that order against assets in other jurisdictions where they may be found. In Switzerland, at any rate, it is apparently impossible to obtain an order for such enforcement on the basis of a without notice order. Such an order can only be obtained from the Swiss courts on the basis of an order made inter partes.
The first and second defendants have given disclosure of their assets as required by the order made by Mr Justice Teare. The first defendant has identified both real properties and bank accounts in Switzerland and in Lebanon. The second defendant likewise has identified properties and bank accounts in Switzerland, a bank account in Lebanon and ownership of shares in a Lebanese company. That last point, shares in the Lebanese company, was at one point during the hearing a matter of dispute, although I am told that the shares are listed in the disclosure which the second defendant has given as being 95 shares in a specific named company. At all events, both defendants have acknowledged having assets in the Lebanon.
The seventh defendant, Arcadia Lebanon, has bank accounts in the Lebanon, and also has documents there which would be caught by the document preservation order.
The claimants have sought equivalent relief enabling them to enforce the Flaux Order in other jurisdictions from the other defendants in the case, but in the event each of the defendants, apart from the first, second and seventh defendants, has come to an arrangement with the claimants which the claimants are satisfied gives them sufficient protection and which means that the applications against those other defendants do not need to be pursued. That is not the case so far as the first and second defendants are concerned. They resist this application. The seventh defendant has not responded to it and has neither filed evidence, nor set out any grounds for opposing the order, nor been represented before me at this hearing.
The first and second defendants' asset disclosure reveals that they have some, but relatively speaking not significant, assets within the jurisdiction. That may be contrasted with the position in Switzerland where they have substantial assets between them, including one property belonging to the first defendant which I am told is worth something of the order of GBP 19 million.
The current position under the Flaux Order is that the defendants are bound by it such that if they were to fail to comply, they would be liable to contempt proceedings against them in this court. However, there is at present no local order in place in the jurisdictions where these defendants have their principal assets. It is not possible for the claimants to take steps to safeguard assets or documents in Switzerland or Lebanon on the basis of the Flaux Order alone. They require orders of the...
To continue reading
Request your trial
-
JSC Commercial Bank Privatbank v Igor Valeryevich Kolomoisky
...Lord Clarke at [18])) and is entitled to have real regard to the concerns articulated by Males J in Arcadia Petroleum Ltd v Bosworth [2015] EWHC 3700 (Comm) as follows: “the fact that the defendants are complying at present does not mean that they will necessarily continue to do so in futu......
-
Cyprus Popular Bank Public Company Ltd Under resolution pursuant to the provisions of the Resolution of Credit and Other Institutions Law 2013 N.17(I)/2013 (acting by its Special Administrator) v (1) Andreas Vgenopoulos
...67 It seems to me that that conclusion also follows from the decision of Males J in Arcadia Petroleum Limited v Bosworth [2015] EWHC 3700 (Comm) on which Mr Samek QC also relied. In that case, a worldwide freezing order had been made by the Commercial Court which contained an undertaking b......
-
JSC Commercial Bank Privatbank v Igor Valeryevich Kolomoisky
...the trial. 51 This point is given some force as a relevant factor by the judgment of Males J in Arcadia Petroleum Limited v Bosworth [2015] EWHC 3700 (Comm) at [71], but some caution is required in giving it too much weight anyway as a freestanding consideration. It will be present in near......